BELGIUM T-BILL AUCTION PREVIEW: On offer next week
Belgium has announced it will be looking to sell a combined E2.4-2.8bln of the following TCs at its auction next Tuesday, June 3:
- An indicative E0.8bln of the 3-month Sep 11, 2025 TC
- An indicative E1.0bln of the 6-month Dec 11, 2025 TC
- An indicative E0.8bln of the 11-month May 14, 2026 TC
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BUNDS: No Lasting Reaction To CPI
The initial downtick in Bunds, driven by the 0.1ppt upside “surprise” in the German CPI data, quickly fades, with the national readings in line with indications provided by the regional releases seen earlier in the day.
- Contract back to pre-release levels of ~131.65 after basing at 131.58, yields 2-3bp lower on the day, light flattening bias on the curve.
EUROPEAN INFLATION: German April Inflation Rises On Services in Line w/ Tracking
Further on the German CPI figures - our projections from the state-level data have materialized, suggesting that the Easter Effect did put notable upward pressure on the print this time (for details, see 'German State-Level CPI Details Point Towards Easter Effect', 11:26 GMT):
- Core CPI came in at 2.9% Y/Y (2.9% MNI tracking, 2.6% prior).
- Of the major sub-categories, services CPI is the most closely watched and accelerated as we expected after the state-level data this morning - the yearly rate rose 0.4pp to 3.9% Y/Y.
- Goods inflation decreased, to 0.5% Y/Y (1.0% prior), driven by energy at -5.4% Y/Y (-5.5% MNI tracking, -2.8% prior).
- Given the Easter impact, there is a good chance that we see at least a partial reversal in services / core in particular next month.
US TSYS/SUPPLY: Quarterly Refunding: No Change In Sizes / Guidance Expected
For the Treasury Refunding Announcement at 0830ET, we will immediately post the most relevant developments (if any) on issuance guidance, anticipated Treasury bond auction sizes for the upcoming quarter, and anything else of note.
- Our preview is here. To recap on the main expectations:
- Treasury is not expected to adjust its guidance that it will keep nominal coupon auction sizes unchanged for “at least the next several quarters”, though there are some analysts that see elevated risks that this guidance could be softened to indicate increased openness to larger coupon sizes in future. This would be a Treasury-negative development as it would suggest risks that higher supply may be coming sooner than currently anticipated by consensus (which is currently somewhere between Q1 2026 and Q3 2026).
- Increases in nominal coupon sizes are not expected for the upcoming quarter. May is set to see $324B in nominal Treasury coupon sales, in addition to $18B in 10Y TIPS and $28B FRN for a total of $370B – a joint-post-Oct 2021 high.
- The refunding documents will be released here.
